Civil Justice Reform-Related Issues On The Radar At ACC

As the outgoing Chairman of the Association of Corporate Counsel's Advocacy Committee, I am privileged to help direct the association's public policy agenda and involvement. ACC has had a longstanding interest in taking positions on behalf of the in-house bar on important issues impacting the profession, including attorney-client privilege protection, multijurisdictional practice (MJP) reforms, corporate responsibility, in-house attorney conduct regulation and best practices, and more. Our agenda also regularly focuses on issues related to civil justice reform, even though we acknowledge that our role is often to support other organizations focused exclusively on CJR who do the lion's share of this work. Previous columns in this publication have focused on our e-discovery reform efforts; today, I will focus on a few other subjects on ACC's CJR-related calendar to share ACC's positions and to solicit your feedback.

Class Action Issues And Reforms

ACC members from certain industries have long been educators and proponents of class action-based reforms. Examples include the manufacturing realm, certain high-risk industries such as drug companies, and so on. Recently, there has been movement within the U.S. that points toward some progress for corporate defendants who claim that the class action bar takes unfair advantage of them and the injured plaintiffs they purport to represent.

First, Congress passed a class action reform bill earlier this year that addresses some class certification issues, specifically focusing on getting certain matters out of state court and into federal courts and consolidated when plaintiffs from multiple jurisdictions are involved. Recently, allegations of inappropriate conduct have also been made against some of the most visible shareholder suit plaintiffs.

Even as the U.S. corporate defense bar takes a bit of solace in these recent events, corporate clients in Canada and Europe - who previously watched the U.S. system and felt relieved to be elsewhere! - are now gearing up for increased class action activity, based on litigation models exported directly from the U.S. experience.

At the ACC Europe annual conference this year, a packed room gathered to hear a plenary panel of European inside and outside counsel outline their perspectives on whether Europe would experience the same class action activity as we've seen in the United States. Many countries in the EU are considering legislation that would allow class action suits. The prevailing wisdom to date of the proponents of such an addition to the European system of justice have suggested that, unlike their litigation-happy U.S. cousins, Europeans are too sensible to use such a new legal process frivolously. They have argued that only cases involving mass torts of an undeniable nature would be set in motion.

The ACC Europe panel advised to that effect. While early class action authorization legislation was passed based on this belief, the early results of analyzing the class actions brought to date question these principles. For instance, the passage of new class action legislation in Sweden was immediately followed by what one presenter termed a series of "hooligan cases," in which disruptive soccer fans used the system to sue venues and jurisdictions that tried to ban them or expel them for their rowdy or violent behavior. Other cases focused on suing the government's power companies when outages due to extreme winter weather earlier this year led to damages.

Several other EU countries are considering legislation similar to Sweden's. The panel predicted that, as more of these laws are passed, the EU as a whole will eventually need to consider legislation to assure cross-border "harmonization." This would potentially introduce the laws into jurisdictions that specifically rejected adopting them independently.

A similar experience was cited by members of the in-house community in Canada, who recently attended a seminar hosted by ACC in Toronto. Canada's corporate community has noted an exponential rise in the incidence and impact of class action litigation in their country. As one of the speakers noted, Canada went from zero to a heightened amount of class action activity in a few short years. Ontario's Act is only a bit more than a decade old, and though it had a slow start, it has more than made up for lost time. Likewise, class action activities in Quebec have surged and other jurisdictions are now in line to follow suit.

ACC will continue to support local members who are working on these issues in jurisdictions around the world, and will be focusing on developing resources that can assist them in their endeavors wherever possible.

Patriot Act Business Records Revisions

Closer to home, many of us have watched various aspects of the Patriot Act affect our businesses. Many companies have faced business records production requests mandated by the Patriot Act when government investigators want to see documents related to investigations of individuals targeted for suspected terrorist or similar activities.

Congress is in the process of considering an administration request to re-authorize The Patriot Act and is being asked to take the business records production requirements even farther. ACC, and a coalition of business and civil liberties organizations (including the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Realtors, The Financial Services Roundtable, and Business Civil Liberties, Inc.), signed a letter to Senate Judiciary Committee Chairman Specter voicing support for some reforms proposed to Sections 215 and 505 of the Patriot Act that would limit the government's ability without judicial oversight to require voluminous and often sensitive records from American businesses.

The House version of these sections would expand the government's power to allow more unlimited demands for any business records, without a necessary nexus to a specific investigation or targeted individual. Thus, the House version would allow the government to make ongoing requests for almost any kind of information. For example, the government could require companies doing business in certain jurisdictions or with people of certain backgrounds or citizenship to provide all information garnered by the companies that details activities in those jurisdictions or by those people indefinitely. Or, it could require all information related to security measures and related compliance activities in industries that the government sees as high-risk terrorist targets, such as energy companies or financial services organizations that are responsible for the movement of large sums of money.

ACC has supported the Senate version of the business records provisions in the Patriot Act with the proposed reforms noted above as they would require judicial oversight. While businesses may strongly support the war on terror, ACC is concerned that requiring companies to conduct the government's ongoing investigations exposes them to potential liability. Companies subpoenaed under these provisions to provide information are covered by a gag order, so they have no right to appeal or question the government's demands. And while the Act offers immunity to companies for their actions in producing records under U.S. law, companies can nonetheless be subject to penalties for violations of privacy laws in other jurisdictions outside of the U.S.

I hope you'll contact ACC if you are interested in similar issues or want to comment on ACC's involvement in the activities mentioned above. Materials from the class action reform programs noted and the Patriot Act letter are all available on the ACC website (http://www.acca.com); we welcome your opinion on these or other issues. Please e-mail ACC's general counsel, Susan Hackett at hackett@acca.com.

Published December 1, 2005.

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